U.S. stocks closed lower in a volatile session Wednesday, reversing their earlier gains as Wall Street digested data that were seen as underlining the economy’s robust health, although that same strength could warrant the Federal Reserve to turn more hawkish and increase corporate borrowing costs.

Major indexes finished out February lower, with the S&P 500 and the Dow logging their worst monthly performance since January 2016 and the Nasdaq posting its weakest month since October 2016.

How did stock indexes perform?

The Dow Jones Industrial Average
DJIA, +0.35%
skidded 380.83 points, or 1.5%, to 25,029.20, sliding 4.3% in February. The S&P 500 index
SPX, +0.01%
shed 30.45 points, or 1.1%, to 2,731.83, for a monthly drop of 3.9%. The Nasdaq Composite Index
COMP, +0.45%
lost 57.35 points, or 0.8%, to 7,273.01, falling 1.9% for the month.

Both the Dow and the S&P were coming off 10-month winning streaks, while the Nasdaq had gained for seven straight months. On a total-return basis, the S&P 500 ended a 15-month streak of gains, the longest such stretch in its history.

Equities have struggled throughout February, with the Dow and the S&P 500 dropping into correction territory earlier this month, defined as a 10% drop from a recent high. The monthly losses were broad, with all 11 primary S&P 500 industry groups closing in negative territory.

The losses have come on concerns over stronger-than-expected inflation, which stoked fears of an aggressive pace of Fed interest-rate hikes.

What drove the market?

In the latest economic data, the pace of growth in the U.S. economy was trimmed to 2.5% from 2.6% in the fourth quarter, largely because of a slower buildup in inventories of unsold goods. The reduced reading on GDP matched the forecast of economists surveyed by MarketWatch.

The data came after comments from new Federal Reserve Chairman Jerome Powell sparked a selloff on Tuesday. The central bank chairman offered an optimistic outlook on the U.S. economy, seen as an indication the Fed may raise interest rates four times in 2018, and not three as it has previously signaled.

Those hawkish comments helped send U.S. Treasury yields and the dollar firmly higher. The yield on 10-year notes
TMUBMUSD10Y, +0.12%
rose above 2.9%, while the ICE U.S. Dollar Index
DXY, -0.36%
rose to its highest level since Feb. 9.

What were strategists saying?

“Valuations are high for all financial assets, and the trick for the Fed will be to get to a normalized rate environment on a slow enough bypass that we don’t hit any speed bumps along the way,” said James Meyer, chief investment officer at Tower Bridge Advisors.

Papa John’s International Inc.PZZA, -0.16%
rose 2.5% after the pizza chain on Tuesday capped off a tumultuous end of the year with an earnings miss. The company also said it is no longer the official pizza of the National Football League.

Dick’s Sporting Goods Inc.
DKS, -0.30%
will no longer sell assault-style rifles, or firearms to anyone under 21 years of age, the sporting goods retailer’s Chief Executive Edward Stack said early Wednesday. The stock rose 0.7% on the news.

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